21 August 2019

Spring Airlines turnaround up in the air

After three years of trying, Chinese budget carrier Spring Airlines won a license to operate domestic flights in Japan in late 2013, boldly going where some major no-frills carriers such as AirAsia are turning back.

Spring Japan, which becomes the fourth budget airline in the country, will fly to Takamatsu, Hiroshima and Saga prefecture starting mid-May from its base in Tokyo.

But that’s only half of the story. Spring’s interest in a Japanese domestic business is tied to its regional ambitions, specifically its plan to tap into the lucrative Shanghai-Tokyo route.

Chairman Wang Zhenghua {王正華} made no secret of it during a recent interview with the Hong Kong Economic Journal’s EJ Insight.

By operating domestic services from Tokyo, Wang hopes to establish a stronger foothold in Japan on which to strengthen its regional capacity.

Already, analysts are warning that Spring is flying into unfriendly skies amid rising Sino-Japanese tensions over disputed islands in the East China Sea.

A government crackdown on official travel in the mainland and increased efforts by other regional budget carriers to win market share further cloud Spring’s prospects.

Cautionary tales are not hard to find.

Hainan Airlines (600221.CN) was forced to halt its Beijing-Osaka service in 2006 after a sharp fall in Chinese passenger numbers over then Japanese prime minister Junichiro Koizumi’s controversial visit to Yasukuni Shrine, seen by China as the ultimate symbol of Japanese aggression and atrocities during World War II.

Xiamen Airlines trimmed its regular services in 2011 amid deteriorating bilateral relations, exacerbated by a devastating earthquake and tsunami in northeastern Japan that year.

In July 2010, Spring launched its first international service out of Japan between Shanghai and Ibaraki, a Japanese prefecture in the pan-Tokyo metropolitan area, according to the Economic Observer.

The timing was perfect. The Japanese outbound travel market was increasingly taking to budget tours amid a crippling economic slump.

But Ibaraki did not appeal to passengers. Inconvenient flight scheduling was also a problem.

Spring has an enviable 95 percent seat occupancy rate on domestic flights in China, reportedly the highest among all Chinese airlines. But a source close to the company said the average rate on its Japanese routes was just 65 percent last year. Given its low pricing strategy, Spring is under considerable strain.

Hopefully, Spring Japan will open the way for domestic and international services for the company from Narita airport, a major Japanese gateway.

If nothing else, it might help Spring Airlines regain some momentum it lost during the three years it took to get a domestic license. Jetstar Airways and Peach Aviation will be nipping at its heels when it starts services later this year.

– Contact the writer at [email protected] 


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